The International Energy Agency (IEA) bumped up its 2020 oil demand forecast on Friday but warned that the spread of COVID-19 posed a risk to the outlook.
The IEA raised its forecast to 92.1 million barrels per day (bpd), up 400,000 bpd from its outlook last month, citing a smaller-than-expected second-quarter decline.
“While the oil market has undoubtedly made progress … the large and, in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said in its monthly report.
The easing of lockdown measures in many countries caused a strong rebound to fuel deliveries in May, June and probably also July, the IEA said.
But oil refining activity in 2020 is set to fall by more than the IEA anticipated last month and to grow less in 2021, it said.
“For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead. Refining margins will also be challenged by a major product stocks overhang from the very weak second quarter of 2020,” the Agency said.
Oil prices dipped on Friday after steep falls in the previous session and were set for a weekly decline over worries that renewed lockdowns, following a surge in coronavirus cases in the United States and elsewhere, will suppress fuel demand.
Brent crude was down by 7 cents, or 0.2%, at $42.28 a barrel, after falling more than 2% on Thursday. US oil fell 13 cents, or 0.3%, at $39.49 a barrel after a drop of 3% in the previous session.
Brent is heading for a weekly decline of more than 1% and US crude is on track for a fall of nearly 3%.
While many analysts are expecting economies and fuel demand to recover from the pandemic, record daily increases in coronavirus infections this week in the United States, the world’s biggest oil consumer, raised concerns about the pace of any recovery.